Has the stock market reversed?

Has the stock market reversed?


At the end of the session on May 25, 2022, VN-Index increased strongly by 35.05 points (2.84%), to 1,268.43 points.

After escaping the bottom of 1,156 points made on May 17, VN-Index rose to 1,240.7 points on May 20 before dropping on May 23, 2022 (-22 points). However, on Tuesday (May 24, 2022), the index formed a beautiful green candle with a long shadow below. 

Technically, this is a sign that the market could see the next bull session. On Wednesday (May 25, 2022), the White Closing Marubozu pattern confirmed Tuesday's candle with an impressive breakout session.

VN-Index formed a White Closing Marubozu pattern.

In addition, according to William O'Neil's theory of momentum boom day, the theory used to determine that the market has made a bottom, the session 25/05 is considered as a day of momentum boom with a sharp increase of 2.84%. , green color spread throughout the market with 415 stocks gaining/49 stocks decreasing. 

Matching liquidity reached VND 15.775 billion, up 31% compared to an average of VND 12,042 billion which was the average matching value of the previous 5 days.

This confirms a 70% chance of a bottom and a new bullish wave.

Thus, in the next 4 to 5 trading sessions, after the day of the momentum boom, if there is no session where the market falls sharply above 1%, a new bullish wave may have started.

In addition, on May 20, the Government officially issued Decree No. 31 on supporting 2%/year interest rate for businesses. According to the approved plan from the socio-economic recovery and development program, the interest rate support capital for businesses, cooperatives and business households is VND 40,000 billion.

In the past, in February 2009, when the interest rate compensation package of 1 billion USD was announced (reducing 4% interest rate), at the end of the month VN-Index bottomed and increased from 235.5 points (February 24) ), to 600 points in October 2009, 154% profit rate within 8 months.

The writer believes that investors can learn from similar behaviors in history, and will take action earlier in the future. Therefore, it can be believed that 1.156 will be the short-term bottom for now.

The most important point is that the panic of individual investors may be over. The market has also gained 100 points from the bottom, the margin call pressure will be negligible. The market will bounce back when a new amount of money comes in or even before that.

Individual investors may consider disbursing part of the capital into businesses with low P/E ratios and growth rates of over 15% in sales and profits. Say no to speculation following rumors.

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